Seattle-based HomeStreet, one of Washington’s largest banking companies, received a caustic letter from a big Texas investor criticizing management’s “poorly conceived” expansion moves and the bank’s performance.

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One of Washington’s largest banking companies, Seattle-based HomeStreet, is under fire from a major shareholder who contends mismanagement has rendered it “the third cheapest public bank” in its class, suffering from “poor returns, bloated cost structure and inefficient operations.”

Charles Griege, whose Blue Lion Capital manages funds that own 5.6 percent of HomeStreet, demanded changes in a blunt and caustic Nov. 20 letter to HomeStreet CEO Mark Mason. He charged that the company’s “aggressive expansion” into California and beyond involved “a poorly conceived M&A strategy” with two acquisitions that spread the modest-sized bank’s management “across eight western states and Texas.”

Blue Lion’s letter, replete with charts, also castigates HomeStreet for an emphasis on growing its mortgage division, declaring that since 2013 “shareholders have benefitted very little from all the time, capital, effort and attention allocated to the mortgage business.”

Meanwhile, HomeStreet’s pay is “staggering,” the letter asserts: “The average employee makes more than $120,000 per year … approximately $36,000 greater than its Pacific Northwest peers.”

A HomeStreet spokesman said the bank is likely to have a formal response to Blue Lion’s letter ”in the coming days.”

According to a Nov. 17 investor presentation, HomeStreet had total assets of $6.8 billion and 111 branches at the end of September, but its third-quarter net income fell by half from the year-earlier period. This year it has closed several mortgage-lending offices and cut 62 jobs.

Griege claims that since the start of 2013, HomeStreet shares have gained just 21 percent including dividends while a broad index of small bank stocks has gained 118 percent. “This valuation is despite operating in what we believe are some of the best markets in the country,” he writes.

The Texas-based investment firm is demanding a seat on the HomeStreet board — something Griege says HomeStreet has previously rejected.

In a regulatory filing it also said it could seek “changes in the board or management of (HomeStreet) and/or a sale or transfer of a material amount of assets.”

Griege writes that six years ago he was “an avid supporter” of the turnaround Mason accomplished at HomeStreet, but that since then management has ignored his “candid yet respectful” urging to “tap the breaks (sic) and slow down the growth.”

Among other criticisms of HomeStreet management, Griege notes it had to pay $500,000 in January to settle Securities and Exchange Commission charges that it used improper accounting practices and took measures to impede whistleblowers. In that settlement the company didn’t acknowledge any wrongdoing.